tv On the Move Bloomberg March 3, 2014 4:00am-5:01am EST
>> russian reaction. moscow's stock market plunges to five-year lows and the ruble slumps as its central bank delivers a shock rate hike. ukrainian rices intensifies. mobilization, the ukraine readies its army as russian troops tightened their grip on the crimea. meanwhile, western leaders while the pressure on. u.s. secretary of state kerry flies to kiev.
good morning everybody. we are live from europe's headquarters here in london. my colleague francine lacqua is off today. we begin with the market reactions to the crisis in the ukraine. investors are selling off russian and western assets on concerns that we are seeing a standoff between russia and the west intensify to a level we have not seen, really, since the end of the cold war. jonathan ferro joins us with the details of the selloff in russia, while caroline hyde takes a closer look at what is happening to european companies and markets. >> russian equities down eight 8.5%.lf percent -- that was for one reason and one reason only, russia's central bank comes out and hikes to seven percent from 5.5%. they say the reason is to prevent inflation risks and ensure financial stability.
it does not remove political risk. that is what is driving these markets. look in commodity markets, that is where you get the broader story. natural gas is up two percent this morning. his been up there since most of the morning. this is critical, not just for russia and ukraine, but for the eu as well. they get a third of their gas imports from russia. that takes away some of the leverage they have in their negotiations. what happens to the likes of europe if they try to have the same sank and you have on iran. that is going to hurt europe. >> some say the explosion is there. if you are a chemical company china keep your lights on -- >> you have the possibility of trade sanctions. how likely is the eu to get onboard with that kind of thing? >> we will talk about that issue little bit later. let's see what caroline has this morning. >> it is not just russian equities that we are thinking,
it is any company that has a significant exposure to russia. morgan stanley has a wonderful bit of data today. to be themetics seems key concern. >> i would not have expected. 39% of sales in 2013 came from russia. look at the breadth of industry tires. cars, nokian carlsberg, 26%. you have dan known, as well. as well.ve danone adidas and banks. keep an eye on those names. really, we are seeing red across the board when you have any kind of marginal exposure to russia. that will be a key concern, risk aversion. interest rate hikes means the
russian population will be less likely to spend, particularly expensive foreign goods, if the ruble is weak. >> this is a potential economic problem. isevery stock on the nymex is tradingnex lower. >> ryan chilcote is following the latest developments in the ukraine. he joins us now on the phone. >> the russians are in control of the crimea. most experts think they have 6000 troops on the ground working together with russian- speaking militias on the peninsula. yesterday, the military forces surrounded ukrainian military bases. the day before that, president putin got permission from russia's parliament to deploy troops. these forces appeared before he got the permission to deploy them, which has led a lot of people to believe that perhaps this is a tactical pause.
real deployment has yet to begin. we may see even more russian forces in crimea. meanwhile, the ukrainians are mobilizing their forces, calling on volunteers to sign up for the army. the key thing here is, guy, we have yet to hear one single shot fired. there is a chance to cool the temperature in crimea, if the parties want to do that. >> ryan, as you talk to people there, what is the sense of the international reaction? what is the expectation moving forward of what the international community will be able to do about this situation in ukraine and crimea? >> it is twofold. many ukrainians are looking what is happening in crimea with a sense of red -- of resignation. i don't think they believe in the idea that they could take on the russian military in crimea and take it back if russia wants to hold on to it.
spent $4his country billion versus -- $4 billion on its military versus russia $77 billion. people are hoping this is some game from president retain and he is just doing this -- from president putin, and he is just doing this as a test and does not intend on doing this. aren't think the ukrainians anticipating that they are going to get any assistance from other countries in terms of troops. they do feel is that this may just strengthen their termsn other affairs in of getting financial assistance, for example, from the likes of the imf. since you and i spoke on friday, that is a factor in this. >> we will be back with you a little bit later. joining us from
kiev. let's talk about that international reaction that we are seeing broaden things out. our european editor david tweed is following the situation from david, germany are seen as the de facto leader of europe . what is for berlin thus far? >> there's not much in terms of leading, because angela merkel did speak to president putin last night. she put out a statement, but we're not seeing her make anything like the same sort of statements we are getting from the united states, in particular from john kerry. i was on a conference call yesterday with the atlantic council, and nicholas burns who is a harvard professor, he's a nato. ambassador to there are three things that the international community could do. one is a concerted voice condemning russia. secondly, international aid. third, hit russia in the pocketbook. we saw the statement that came out of the g8 last
night. they condemned what russia is doing, and they said that they would support any aid efforts. that is the second thing, is the imf's team going off to the ukraine this week. i should inc. that we probably will get some sort of announcement about what we will get there -- i should think that we would get some sort of announcement. one wonders how effective they are going to be. >> i guess it depends how they are targeted and who the are targeted at. maybe they are targeted at the oligarchs. that is something president putin has to think about. europe has significant exposure to russian gas. we rely on one third of our gas imports from russia. to what extent is it seeing that that may strengthen the hands of the european foreign ministers?
>> russia for its part is reliant on the revenues that it gets from that cas. 20% of its export revenue comes from that cast. russia needs that money, as well. there's going to -- it is going to be key to see how both sides negotiate. one of the other things to watch for is what the foreign ministers decide today. we will be meeting in brussels a little bit later. john kerry was speaking last night, he said he spoke to the russian foreign minister plus other foreign ministers, and they are all willing to do what they need to do to isolate russia. meandoes isolating russia in that diplomatic language? does it mean sanctions? if so, how will the europeans target those? that is what we need to hear from the foreign ministers today, guy. >> thank you very much, david. monitoring the european situation from berlin for us is david tweed. what else -- what else is on our radar this morning?
12 years a slave is the winner this year for the academy awards. it did very well, to say the least. it also one best adapted the best oscar for best supporting actress as well. pointed toadings slow down in the chinese economy. fell tofacturing gauge a seven-month low of 48.5. the government reading fell to 50.2. the premier is meeting with the government this week to map out the economic strategy. president obama and israel he prime minister benjamin netanyahu are seizing the moment to make peace. he believes the palestinian authority president is sincere about recognizing israel. president obama made these comments in an interview. the world is watching
russia. will president putin take crimea and leave ukraine alone? or is this the start of the cold -- of a cold war power grab? don't miss that conversation. it is coming up next. later in the hour, don't miss our all-star panel on european tech startups and women in leadership. these two leaders will join us later on "the pulse."
>> good morning, welcome back. you're watching "the pulse." the escalating crisis in the ukraine. our next guest is the former russian nuclear weapons specialist who has been accused of spying for the west by russia. he was released in a 2010 prisoner exchange with the united states. he's now a research fellow at the royal united -- let's welcome him. good morning. let's start off with the situation as we now see it. there is a massive market reaction this morning. the ruble is crumbling. ,he stock exchange in russia capital flight is taking place. what extent will that influence the way president putin thinks about the situation in front of him? >> he is a tactician and he thinks in a very tactical sense.
he thinks a temporary reaction will be settled down once the world realizes he cannot do anything. russia will take control of crime year and putin believes that it will be ok for russia. >> your assumption is that is what he is going for. he wants control of crimea. >> he wants control of crimea for two or three reasons. the first one is that he tries inreplicate the situation georgia. of stability to have leverage. secondly, is a geopolitical need. reasons.aphical will lose this base, it will lose the possibility, the chance to influence the situation in the whole black sea
region, which is unacceptable for russia. it was the base for russian fleets for over 220 years. leverage itse west position here? what is the point of pain for resident putin? is one thing being done in brussels today, to change putin's course. >> is extremely difficult if possible at all to force him to change his course rapidly. he will not react. he is a sort of tank going forward. he does not think of the next step before he finishes the first step. he will continue his policy. the west will not react and will swallow what has happened. very pessimistic about the prospects to change his policy right now. >> who does he listen to?
>> first of all, he listens to his team which rules russia. >> could they be targeted? if --might be targeted putin will become a very serious liability for this team. he might be forced to change the policy. >> a likelihood of that happening? if you were forming policy, that would be the point of maximum leverage, do you think? >> it seems to me that might be the most sensitive and most painful thing for vladimir putin. that will be the clear violation of his contract, a social contract with his small team of oligarchs and rulers of russia. he does not believe it, because his contract is to defend their interests. if their properties elsewhere could be affected, that is reason for them to think.
about's talk a little bit europe's exposure to russia and how much that will hamstring foreign policy. we rely on one third of our gas supplies coming from russia. some of that can be substituted. canreuss -- belarus replace some of that. >> first of all, as far as i can number, 51% of russians -- of the russian budget comes from oil and gas revenues. no less than 20% of the russian budget comes from gas flow to europe. vladimir is that putin's psychology is that of theperson who grew up in court gangs in leningrad. he is used to fighting without rules. only after that he will think it over.
he is prepared to take much higher losses now. longer term, he will probably suffer more than the west. once, it was angela merkel who said seven years ago, when putin tried to use the gas weapon, she said to not forget -- he said do not forget who sells her gas. and she said to not forget who buys your gas. >> it is a point she will probably be making most forcefully. another thing that is standing that here's is a man of significant ego. if you was removed from the g8, how much of a blow that the to him? >> it would be a great personal blow, because he values that a lot. he values the publications by to be more influential. thatlues that a lot, but
is the sense of his personal ego. this highly personalized russian foreign policy might play a role, but once again that will not play rapidly. the point is that i do not see what extremely forceful actions might drop him right now. not stop, especially keeping in mind that it is announced he has suspended. the west will have to swallow -- that is his calculation. >> thank you very much indeed. big with company views. berkshire hathaway has mystified your target for the first time since warren buffett has taken
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she bounced back in a dual event that took lace in japan. who knew? live action continued in switzerland in the ladies downhill world cup event. big big fog. the active course. bahrain.warmer in lewis hamilton was the fastest in the final day. the mercedes team is in for a good start of the competition which begins in australia. sebastian federal didn't even complete a lap before problem struck his vehicle. problems struck his
vehicle. >> pressure might be the right word, guy. political risk, escalation risk. every stock in russia is trading lower. pretty much every single benchmark in europe trading lower by over one percent. the deck -- the dax down by two. you get stock specific and check out carlsberg, the fourth-largest brewer in the world. 25% of their revenue comes from russia. that is exposure. commodities moving as well. check out natural gas. russian gas accounts for about one third of the gas imports. it matters. you can see risk aversion spreading through the market. stronger.r, yen risk aversion across the board, guy. >> jon ferro, thank you very much. , what canommission
>> good morning, everybody. you are watching "the pulse." we are live from bloomberg's headquarters here in london. i am guy johnson these are the top headlines. u.s. secretary of state john kerry is traveling to the ukraine today. ukraine has mobilized its army. >> countries are going to assemble in sochi. 19th century behavior in the 21st century, there is no -- >> we have a problem with our feet.
-- with our feed. government shows that output fell to an eight-month low. a private report indicates that the contraction is worse than last month. the paralympic gold medalist is about to appear in court. he is charged with premeditated murder. this story is has admitted to shooting or three times in the middle of the night. he said he believed he was shooting a burglar. gears let's change completely. let's focus on europe and the unemployment situation that the continent has. it is one of europe's biggest challenges. recordes have struck a 12% for months. if you look at the figure, youth above.yment is way
countries like greece and spain, alarming numbers. this brings us to our next panel. could the text -- could the tech sector help this hiring problem on our continent? joining us to discuss this is the european commissioner for the digital agenda and tech city u.k. chairman joanna shields. good morning to you both. let me start with you. clearly ant is problem. one of the things that stands out over the last two years is that the digital economy is gaining traction here, but not fast enough. what barriers can we, should we remove that would speed that process up? agree that youth unemployment is the main issue that we should really be worried about if you're looking at the figures. especially talking about youth unemployment in the southern part of europe. it is up to 60%.
unacceptable, lost generation. there is a solution. the digital agenda could solve part of the problem. what is at stake? appcially talking about development possibilities. thinking.ungsters are the last two years, more than 800,000 jobs are created in that sector. it is expected to be millions in the coming years. then we are talking. that is one. another part i'm talking about in general of unemployment, also about female employment, what is at stake? jobs in therelated year are notoming
to be fulfilled if we are not taking action. is talking about 2015, which around the corner. 140,000 jobs that are vacant and not to be filled. therefore, we need to give more opportunities, and just finding gap is in the curriculum when you are interested in those types of jobs. worke skills to make this is a massive part of this. we have a youth unemployment situation right now. we have educated these people already, they are now potentially and should be entering the workforce. yet, we are struggling with it. how do we retrofit all these people? morean they be able to do in the digital economy? >> first, the tech and digital sector is leading the recovery in the u.k..
jobs are coming from that sector in london. it is a very encouraging sign. we have 83,000 or jobs that come about in the last three years in the tech sector. 600,000 people employed in the capital and technology alone, which is fantastic. it is diversified away from financial services. to prepare this next generation and give them the skills they need. we need to demystify technology and make sure that along with our stem curriculum, the science and technology curriculum, the people start to understand that -- that code is how things work in this world. it is happening as we speak. we are trying to get as many ofng people to learn an hour code so that they understand it is not that difficult. they will get interested in it, so that in september when the new curriculum comes in place in the u.k., they will be excited about it and embrace it much more so. i am out 24-year-old, of university, i don't have much
in terms of digital skills. knowledgehave greater than the previous generation, but how do i get myself into the digital economy? how do i reduce the barriers to start up a company? >> number one, i don't believe that a 24-year-old is not connected with the digital world . they're using their mobile's and other devices. there shouldn't be a scared attitude. people should take initiative. example, in the development area, apt developing area. you can do it yourself. there is a campus for i.t.. there were more than 10,000 youngsters between 14-year-olds and 30-year-olds gathered and taking initiatives and joining. >> 60% youth unemployment in certain parts of europe.
clearly, we are not making the connection. >> i think there are pockets in clusters like tech cities and across europe. there are pockets where this is changing. the government wanted to reach out to the technology industry to try to solve the problems that were being created for people around floods. we put a call to action out to the tech community on a friday night at 10:00. by sunday morning we had 200 developers lining up outside the google campus. they spent an entire day, although sunday during a just out of the goodness of their hearts. they created 18 applications in a day, connecting people with their insurance claims, helping them find volunteers, giving them food, helping them move livestock to higher elevation, you name it. they all came together. what it showed to me was that this community is responsive, it is resourceful, and it is a totally new way of looking at things.
>> how do we get 60% -- >> sometimes, just a small initiative is like a snowball. ambassador emptied his fitness room in the embassy building and started a center for startups for young entrepreneurs. and a together mentors university for business models and so forth. he put together the startups and it is going. >> how does the commission do more? how can it make companies easy to start up? >> that is another part. the commission, together with the business world, now we have 47 big companies that are involved, but please join us. a bridge to find between, on one hand the ,nfilled vacancies, ict related
and nearly every job is ict related. also on the other hand, the big numbers of unemployed people. if you are interested in finding a job in one of those companies, then you can just join and find out where the gap in your curriculum is. they are offering training. they are offering new possibilities and opportunities for getting a part of education. that makes sense. then you are talking about still numbers, big numbers. not enough that we have to enlarge. the european commission is not making congratulations about that or whatever. it is just pushing initiatives and bringing parties together. we are impressed by what the u.k. is doing in general terms in this field. it is remarkable and it is proven to be a positive result -- is proven to bring positive
were talking about government providing a framework in which women can act as leaders, but also the digital economy can thrive. can you put those two together form a? the digital economy thriving and women leadership? it seems like an area of potential progress. >> i'm a strong believer in women leadership. the example is sitting next to me. >> that works vice versa as well. >> that is not your program, is it? did, and for me, also to prove that you don't need to be a silicon valley in europe. don't copy, make your own valley. create your own valley, so to say, in the tech cities. having said that, the fee tail on trip -- the female entrepreneurship, we can't
afford to just dismiss this opportunity. opportunity, and especially talking about a digital agenda. so many areas are excellent, they're fascinating for girls, for women. we need them -- we need to get we arenterest. >> what creating is a sort of green fields part of the economy. we are starting from scratch in many ways. waysous ideas of the things function, the boys club, does not exist in the same way. that has got to be a huge advantage. t> i am preparing for a cbi speech next week. i went there my first time 25 years ago as a product manager for a silicon valley company. consistent iny those days was that i was the only woman in the room, especially in technical roles. in creating products and developing silicon chips and other things.
how, i am incredibly encouraged. we have been through my speech, of course. how may women are starting their own businesses, and how many women are playing a key role in this digital and internet economy. if i look around in tech city, there are so many women with businesses. there is an article in the newspaper about the hour of code that we talked about. we are all engaged in driving this agenda forward. i'm really proud of the young women that i work with that i have met over the years. there are so many more out there. we want to get the message out. new is a new economy and a chance for us. the flexibility of a digital business as an entrepreneur, you can be a single mother. you can run a business from your home. it gives so much more flexibility. it is incredible to see. >> what are you doing with the commission to encourage his? >> just asking advice from those who have proven to do it.
is that -- >> this is to create the right conditions for entrepreneurship. this is not just in the u.k., but for all across europe. >> we're going to wrap it up there. i want to show everybody a new cartoon that is making you chuckle this morning. let's get a shot of this. maybe this is the way that we need to go. becoming a startup. >> let him be the doctor and the lawyer, but his sister being the one who is developing the apps. fantastic. >> ladies, thank you very much, indeed. right, let's move on. if you want to be a successful
entrepreneur, do drop out of school early or get all the schooling you can first? in our series, and edwards -- anna edwards drops out to become a super car salesman. isn't any car that i can supply within 40 hours -- 48 hours. it is a challenge and i live up to less expectations. >> if you want a supercar, where'd you go to buy when? london's mayfair may sound like a good place to start, or you could try behind these gates in england's lower midlands. it is here that you will meet tom hartley. a school dropout, he has been selling cars since he was 12 years old. his speciality is fighting the high-performance cars that you can't. by dedication in school was very poor. you could call me a dunce. i used to use a book called the
glossy guide. >> you said you never switch off , that you are always working. is that something you're born with? >> i think you have to be born with that gift. you definitely do not go over book. >> he boasts about not being able to use a computer. his son does, though. it changes the way they do business. it can be late at night on a bit ofjust having banter. you know he is but a car or i have bought a car from him. , instant messages, bbm, whatever. this morning i sold a rolls-royce ghost in six messages. it sold for 144,000. >> in six messages? >> yes.
>> while this multimillion torres -- -- for orres -- >> edwards for bloomberg. >> party of coverage coming up. id of coverage on the situation in the ukraine. deteriorating. the country's energy situation is crucial. after the break, we'll find out who is waiting in -- who is weighing in on the ukraine's power struggles. ♪
>> welcome back. we're taking a closer look at europe's energy situation. affected by the conflict in the ukraine. what happens next is completely up in the air. joining us now is the executive chair of the global energy symposium. let's talk about europe's exposure to russian gas and the ukrainian throughput. to what extent should we be worried by the escalating situation? >> the longer this crisis remains, the greater the impact
is going to be on energy expectations in europe. we are already seeing that this morning. of any has happened great significance in the ukraine other than some russian troops showing up in the crimea. it has been enough to start spiking prices and spiking future levels. that is going to be more pronounced as we move forward. the interesting thing is what is already doing in new york, which i think is an overreaction at -- moment, given what is at what is actually occurring. i keep telling people this is an integrated international market. depressed rates today. your read on that is a number of things. you told me that they are having problems financing exports. to what extent does this relate back to the oil and gas industry? >> the difficulty that the russian budget is experiencing is that they are having an
expanding deficit at $110 a barrel. if we go back several years, they're doing rather well balancing the budget at $60 a barrel. every single increased difficulty in funding export into what is the kremlin our needs and that is a full flow of finance. >> how much substitution can there be? are there ways around the situation? >> no. the energy crisis in the ukraine will become acute and quickly. , thered no difficulty was an arrangement that had been set up between ukraine and russian gas prom -- and russian azprom. there were supposed to be an extension of credit. all of that is over. it is back to cash on the barrel head and ukraine cannot afford
to buy natural gas. an lngalking about terminal outside of odessa, but that will not particularly help. one problem people have not really looked at yet is the ukrainians, like a number of people in europe, have been relying on toward coal to offset the natural gas pricing situation. there are some reverberations this morning from the netscape onetsk. internally, we are having an energy problem. >> to what extent do you think this will refocus minds back on european fracking? >> my primary situation over the weekend was to update people on international fracking, on the advantages and disadvantages and the politics attending it. posee extent that one can
objectively and resolve the major environmental issues, and we are just about there right now, it is a no-brainer. if you have domestic sources of unconventional gas, those sources will establish the foundation for a lower overall pricing. will risk --they they will take that risk. >> is because of this domestic largess. having said that, there are places where you should not frack. there are places where the geology, where the seismic activities, where the locations , simplyater table, etc. say this is not suitable. it is not a one-size-fits-all situation very >> we will leave it there. the executive chair of the global energy symposium. for those listening on bloomberg the secondring you
>> pressure reacts. -- pressure reacts. moscow's stock market dropped the most in five years, as the central bank issues a rate hike. ukrainian situation intensifying as well. russian troops tightened their grip on the crimea. western leaders are piling the pressure on vladimir putin. eu foreign ministers holding an emergency meeting today. the u.s. secretary of state flying into kiev.